21 July 2016: Nifty Elliott wave analysis: Do not trade a side wise market. If market has to break higher then it must come through short covering only.

You must read previous articles and watch the given chart carefully to understand this article completely.

For 21 July 2016: -

On 20 July 2016: FII Net Bought – INR 215.21 Crs:  DII Net Sold – INR – 45.45 Crs

As expected it remains a range. It is again hitting upper end of the resistance levels. We are eventually near to 8600 levels. Will it break higher or will it remains under consolidation? This is a billion dollar question. It can hard to trade. I suggest sitting on side line. Note that if we can see good crossover of 8600 then only we can think for fresh extension of this rally. If this happens then we can see levels of 8700+ before expiry. If it fails then we can see a dip around 8470-8460 first.  

For today’s trading session I am expecting market to open on flat note. The zone of 8470-8600 will not give any direction of trade. I must be clear that we may not have any chance of breaking this range sooner. Equally, there is no great signal to short either. I still believe that Nifty can take a surprise swing of 200 points sooner or later before expiry. It can be up or down.

After looking to this structure and then way market has refused to break below 8000 even in panic we can say that market is preparing something big. This big think can be as big as 9000-9100 levels of Nifty. I see such great possibility hence bears must be cautious.

Do not misinterpret. I gave a long term trend as down from more than a year back. Nifty hit 9119 and then I issued for a long term top. Nifty hits a low at 6825 on Budget day this year. After such down side, wave theory had suggested for comparable recovery with three big possibilities for retrenchments, first to come at 50% at 8000, 61.80% at 8250 and 76.40% at 8575.

101%, I retain my view for long term trend down but that does not says that we cannot interprets for short to medium term of recovery. This recovery was bound to come and it is coming to make a wave [B]. Now, just imagine the magnitude of wave [C]. Higher the retrenchment, bigger fall will hit in future. If this wave [B] tries to end up near 9000 then 9119 may not be visible for many years. So, where is my long term target on Nifty? Well, it is in the zone of 6000-5500.

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Strategy for Nifty July future – On higher side 8620 will act as resistance and 8550 will act as support before any decisive up or down here. I suggest not trading in this zone. If this can surpass above 8620-8630 then we can expect levels of 8680-8700 on the account f short covering. Will short covering come? Let us see.

BANK NIFTY – I am keeping study remains unchanged. This is expected reaction on levels above 19000 but this is not giving any good chance to correct. Remember, that as long as it is above 18700, I cannot suggest shorting. This is sectorial index and may perform better than blue-chip index. On higher side it will face resistance at 19100 levels. I like to see if it can recover from lower support or will it break the support.